Another step in the increasing awareness of the benefits of custom target date funds (cTDF) was announced last week, as BNY Mellon Investment Management revealed a new partnership with Wilshire Associates to launch the BNY Mellon Investment Management Custom Target Date Builder.
The companies said plan advisors, sponsors and participants can all benefit from advisor use of the platform, claiming it will “provide more choice to the target date fund business dominated by large fund providers.”
“We have $94 billion in assets in the defined contribution space in active management with a big index presence, both in mutual funds and particularity collective investment trusts,” Andy Provencher, Head of North America Distribution for BNY Mellon Investment Management, said. “A couple of years ago, the firm took a step back from the advisor-sold DC space and tried to think about the right way to re-enter a market dominated by essentially five firms that offer target dates, and to do so in a way that provides a better a better solution and options for both advisors as well as far as the plans themselves.”
More information about the cTDF platform can be found here.
Sharing a belief with Wilshire that the next evolution of the retirement plan industry in the small- and mid-market is customization around glide paths and open architecture, he claimed it results in greater access to a best-of-breed roster of managers and various asset classes, as opposed to the one size fits all, closed architecture approach Provencher said has become popular.
“There was both an opportunity and a market need. Small- and mid-sized plans can benefit from the same aspects of custom target dates that larger plans have enjoyed,” Provencher added, emphasizing the platform’s unique technology.
Specifically, advisors can use the platform to:
- Help limit fiduciary risk;
- Facilitate the ability to consult on a plan lineup (within and outside of the target date solution);
- Scale the custom target date portion of their book;
- Works with funds beyond recordkeeper lineup; and
- Permit preferred funds that pass the Wilshire screen.
Plan sponsors/participants also benefit from:
- Reduced liability for sponsors;
- Diminished investment manager and longevity risk for participants;
- Competitive pricing that leverages the efficiencies of the companies’ investment/research capabilities; and
- Plan-level customization for participants with the potential for better outcomes.
“The availability of this innovative new tool arrives at a befitting time when we are seeing increasing demand for target date funds from plan sponsors as a default 401k investment option, and the embrace of CITs in DC and DB plans with their lower costs, greater flexibility, and fewer regulatory/administrative requirements,” Jason Schwarz, Chief Operating Officer, Wilshire Associates, concluded. “Our partnership with BNY Mellon Investment Management is altering the custom target date universe where plan sponsors had off-the-shelf target date options from a few dominant asset managers and now they have the same variety and richness of institutional investment options large plans have accessed to customize to their exact specifications.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
